14. Equipment which cost $213,000 and had accumuiated depreciation of $114.000 w
ID: 2601209 • Letter: 1
Question
14. Equipment which cost $213,000 and had accumuiated depreciation of $114.000 was sold for 213,cco 111,000. This transaction should be shown on the statement of cash flows indirect method) as a(n) Y, addition to net income of $12,000 and a $111,000 cash inflow from financing activities deduction from net income of $12,000 and a $99,000 cash deduction from net income of $12,000 and a $111,000 cash infiow from investing activities addition to net income of $12,000 and a $99,000 cash inflow from financing activities ntoman innow from investing activities 1140 st Use the following information for questions 15 and 16. non Lange Co. provided the following information on selected transactions during 2011 ount 48,0 Purchase of land by issuing bonds Proceeds from issuing bonds Purchases of inventory Purchases of treasury stock $250,000 500.000 950,000 150,000 350,000 28,7 638 Loans made to affiliated corporations Dividends paid to preferred stockholders Proceeds from issuing preferred stock 100,000 400,000 50,000 roceeds from sale of equipment 15. The net cash provided (used) by investing activities during 2011 is 50,000 : (300, 000). $ (550, 000) d.$(1,250,000) 16. The net cash provided by financing activities during 2011 is s550, 000 s650, 000. c. $800,000. d. $900, 000 Use the following information for questions 17 and 18 Equipment that cost $300,000 and had a book value of $156,000 was sold for $180,000. Data from th comparative balance sheets are 12/31/12 12/31/11 $2,160,000 $1,950,000 Equipment Accumulated Depreciation 660,000 570,000 17. Depreciation expense for 2012 was a. 5258,000 $234,000. Slo c. $54,000 d. $36, 000 8. Equipment purchased during 2011 was Dep 536 $510, 000. . $210, 000 231 144000Explanation / Answer
14.
Answer = C
Cost = 213,000
Accumulated Depreciation = 114,000
Book Value = 99,000(213,000 – 114,000)
Sale Price = 111,000
Profit on sale = Sale price – Book Value
= 111,000 – 99,000
= 12,000
While calculating Net Income we must have added 12,000 in P&L but while preparing Cash Flow statement we will deduct it while calculating Net income and Sale of Equipment affects Long term asset so it will be added while calculating Cash flow from Investing Activities.
15.
Answer = B
Cash flow (Used) from Investing activities will contain the transaction which affect cash and Long Term Asset of the company
= Proceeds from sale of equipment + loans made to affiliated corporation
= 50,000 + (350,000)
Cash used in Investing Activities = (300,000)
16.
Answer = $650,000
Cash flow (Used) from Financing activities will contain the transaction which affect cash and Long Term Liability and Equity of the company
= Proceeds from issuing bonds + Purchases of Treasury Stock + Preference Dividend paid + Proceeds from Preferred stock issue
= 500,000 + (150,000) + (100,000) + 400,000
Cash flow from Financing activities = $650,000
17.
Answer = B ($234,000)
18.
Answer = A ($510,000)
Equipment A/c
Particulars
In $
Particulars
In $
To Bal. b/d
1,950,000
By Bank
180,000
By Accumulated Dep.
(300,000 – 156,000)
144,000
To P&L (Gain on sale)
24,000
To Bank (Bal.)
(Purchase)
510,000
By Bal. c/d
2,160,000
Total
2,484,000
Total
2,484,000
Accumulated Depreciation A/c
Particulars
In $
Particulars
In $
To Equipment
144,000
By Bal. b/d
570,000
By P&L (Bal.)
(Current Year)
234,000
To Bal. c/d
660,000
Total
804,000
Total
804,000
Particulars
In $
Particulars
In $
To Bal. b/d
1,950,000
By Bank
180,000
By Accumulated Dep.
(300,000 – 156,000)
144,000
To P&L (Gain on sale)
24,000
To Bank (Bal.)
(Purchase)
510,000
By Bal. c/d
2,160,000
Total
2,484,000
Total
2,484,000
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